Setting starting and acceptance prices affects auction participation

Surofi has noted a point under chapter 4.5 "Large integrated players". It describes how shipping companies can influence participation in the action through starting and acceptance prices.

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Senior researcher Geir Sogn-Grundvåg at Nofima has led the evaluation in collaboration with the University of Stavanger (UiS). He emphasizes the importance of setting starting prices somewhat lower than acceptance prices in order to attract more buyers and achieve higher final prices.

Better auction prices

"In a scientific article, we have investigated how the setting of starting and acceptance prices affects key aspects of the auction (Sogn-Grundvåg et al., 2024). In the analysis, we have used data for frozen H/G saithe from the Råfisklaget."

The results, which are statistically significant, show that if the starting price is set lower than the acceptance price, the probability of sale through the auction increases.

This also means that if a shipping company does not want to sell through auction, the likelihood of this will increase if the starting price is set equal to the acceptance price.

The probability that two or more buyers will actively participate in the auction also increases when the starting price is set lower than the acceptance price.

Finally, the results show that the price achieved in the auction increases when the starting price is set lower than the acceptance price.

Making raw materials more accessible

- The evaluation of the auction obligation is based on two full years – 2022 and 2023 – with a partial auction obligation, and we can now confirm that the scheme has worked, says senior researcher Geir Sogn-Grundvåg at Nofima. The work on the evaluation is funded by the Norwegian Fisheries and Aquaculture Industry's research funding.

Sogn-Grundvåg points out that the proportion of frozen raw material offered in the auctions of Råfisklaget and Surofi increased significantly in 2022 and 2023 compared to previous years.

The scheme was introduced to ensure open competition for the raw material, and has contributed to better access for industry in Norway. The main purpose of the auction obligation is to make raw materials more available in an open market, including for the Norwegian processing industry.

The Nofima researchers recommend adjusting the regulations to increase the availability of raw materials in auctions. A change from a mandatory tender to a real auction obligation, where, for example, 50 percent of each vessel's annual landings of frozen cod and saithe are to be traded through auction, could ensure higher value creation and competition.

The report "Evaluation of the auction obligation for frozen cod and saithe" from Nofima. Click here to read more about the report. Read the report here .